Press Releases
10/17/2023
Connecticut Leads $20 Million Multistate Settlement with ACI Worldwide Over Unauthorized Withdrawals
(Hartford, CT) – Attorney General William Tong and Department of Banking Commissioner Jorge Perez today led a coalition of 50 states and territories announcing a $20 million settlement with payment processor ACI Worldwide over a 2021 testing error that led to the unauthorized withdrawal of $2.3 billion from Nationstar Mortgage (also known as Mr. Cooper) customers. Connecticut will receive $558,740 from the settlement, which includes a $220,000 additional payment due to Connecticut’s leadership role in the multistate, multi-agency action.
ACI is a payment processor for a variety of third-party clients, including mortgage servicers. Mr. Cooper offered ACI’s Speedpay product for its customers to schedule their monthly mortgage payments, enabling automatic transfers of authorized mortgage payments from their personal bank accounts to Mr. Cooper. The violations occurred on April 23, 2021 when ACI Payments erroneously used live customer data in a test of its Speedpay platform, causing unexpected and sometimes multiple mortgage payments from customer accounts. In some cases, these transactions exposed consumers to overdraft or insufficient funds fees. While the vast majority of withdrawals did not go through, 1.4 million transactions totaling $2.3 billion were processed, impacting 480,000 Mr. Cooper customers. In Connecticut, 7,136 consumers were impacted. ACI took immediate corrective steps to minimize the impact of the testing error and all accounts were ultimately restored.
In addition to the $20 million payment to the states, today’s multistate settlement requires ACI to use artificially created data rather than real consumer data when testing systems or software, and further requires the company to segregate any testing, development or quality insurance work from its consumer systems. The agreement additionally mandates regular reporting (for two years) to a state regulator monitoring committee to ensure both the adequacy of the risk management programs and compliance with the order.
State financial regulators including the Connecticut Department of Banking license and supervise over 33,000 nonbank financial services companies through the Nationwide Multistate Licensing System (NMLS), including mortgage companies, money services businesses, consumer finance providers and debt collectors. Connecticut consumers can submit complaints about nonbank financial services companies by contacting the Connecticut Department of Banking at https://portal.ct.gov/DOB/Consumer/Consumer-Complaints/Consumer-Assistance or calling 860-240-8170. Consumers can also verify that a company is licensed to do business in their state, and view past enforcement actions, by visiting NMLS Consumer Access.
“Any financial institution with access to billions of dollars needs robust and redundant security measures. ACI’s unauthorized withdrawals resulted in massive chaos and confusion, exposing consumers to overdraft fees. Connecticut helped to lead this major multistate investigation and settlement, forcing significant penalties and strong security measures going forward to ensure this error is never repeated,” said Attorney General Tong.
“I congratulate the coalition of states, and more specifically the staff from Connecticut in addressing this issue and making sure consumers remain protected and made hold when their accounts were erroneously debited. The remedies found in this agreement are intended to prevent future errors from occurring not only with mortgage-holders serviced by Mr. Cooper but throughout the industry,” said Banking Commissioner Jorge Perez.
“Companies with access to billions of dollars and consumer information have a duty to respect consumer trust and protect their confidential financial information,” said Department of Consumer Protection Commissioner Bryan T. Cafferelli. “We are hopeful this settlement will prevent any similar issues in the future.”
Impacted consumers have received direct compensation from a separate class action settlement. For more information on the class action settlement, visit here: https://achloanpaymentlitigation.com/ Additionally, the Consumer Financial Protection Bureau has issued a $25 million penalty and consent order against ACI requiring the company to commit to consumer safeguards.
Click here to read the enforcement action with state financial regulators, and here for the Connecticut consumer protection settlement, which includes the list of participating states.
Connecticut and Arizona, California, Colorado, Florida, Illinois, Nevada, New York, North Carolina, Ohio, Oregon, Texas and Washington led the multistate coalition.
Assistant Attorney General Amor Rosario and Deputy Associate Attorney General Phil Miller, Chief of the Finance Section, assisted the Attorney General in this matter.
- Twitter: @AGWilliamTong
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Media Contact:
Elizabeth Benton
elizabeth.benton@ct.gov
Consumer Inquiries:
860-808-5318
attorney.general@ct.gov